The Kaposi sarcoma-associated herpesvirus (KSHV) latency-associated nuclear antigen (LANA) is a multifunctional protein with roles in gene regulation and maintenance of viral latency. Post-translational modification of LANA is important for functional diversification. Here, we report that LANA is subject to arginine methylation by protein arginine methyltransferase 1 in vitro and in vivo. The major arginine methylation site in LANA was mapped to arginine 20. This site was mutated to either phenylalanine (bulky hydrophobic, constitutive methylated mimetic) or lysine (positively charged, non-arginine methylatable) residues. The significance of the methylation in LANA function was examined in both the isolated form and in the context of the viral genome through the generation of recombinant KSHV. In addition, authentic LANA binding sites on the KSHV episome in naturally infected cells were identified using a whole genome KSHV tiling array. Although mutation of the methylation site resulted in no significant difference in KSHV LANA subcellular localization, we found that the methylation mimetic mutation resulted in augmented histone binding in vitro and increased LANA occupancy at identified LANA target promoters in vivo. Moreover, a cell line carrying the methylation mimetic mutant KSHV showed reduced viral gene expression relative to controls both in latency and in the course of reactivation. These results suggest that residue 20 is important for modulation of a subset of LANA functions and properties of this residue, including the hydrophobic character induced by arginine methylation, may contribute to the observed effects.